NEW YORK, United States —Saks Fifth Avenue President Marigay McKee plans to spend $1.25 billion refurbishing the luxury chain over the next two years as she tries to broaden its audience and price ranges.

One-fifth of the capital expenditures will be concentrated on the Manhattan store, McKee, 48, said in her first interview since arriving at her New York office this month. Saks was acquired by Hudson’s Bay Co., a middle-market Canadian department store chain, for $2.4 billion in November. The deal brought together the Hudson’s Bay, Lord & Taylor and Saks brands, creating a company operating 320 stores.

McKee said she wants to move Saks’ clientele beyond the core 48-year-old female, without losing her, as well as modernize the chain without harming its DNA as an elegant emporium once frequented by Audrey Hepburn, Grace Kelly and Jackie Kennedy. Saks will add exclusive merchandise because, she said, department stores look too much alike with the same kinds of goods from the same well-known brands.

“The department store is ripe for this,” McKee said. “We will be focused a lot more on trend. It is a leap. It is a journey. We need to make sure we don’t alienate our existing customer.”

The new chief assumes her role just as the U.S. retail sector winds down a lackluster holiday season that saw retailers of all stripes resorting to profit-killing discounts to draw reluctant shoppers. McKee said she sees strong demand for jewelry, watches and the most expensive goods, and is optimistic about the luxury segment.

Younger Customers

McKee plans to vie for younger customers in cities populated with university students and young professionals. She aims to narrow her focus by offering different merchandise to young shoppers in Boston than she does for those in Atlanta and Texas.

In the more youth-oriented stores, McKee will ramp up contemporary fashions and add international designers from Britain and France, she said, without naming them. At the same time, McKee intends to sell more uber-luxury goods, such as exotic-skin fashions, couture and runway clothing, in locations where the richest clients want to spend hundreds of thousands of dollars. She declined to say what the net effect her strategy may have on the chain’s average prices.

The capital expenditures will be focused on the most productive of Saks’s 41-store locations, she said. The bottom ten performing stores will be reviewed for possible switching to the Lord & Taylor nameplate or for closure, she said. Saks’ new parent company has already announced a Saks expansion into Canada.

Hudson’s Bay

“Clearly, we are a company that wants to be profitable,” McKee said.

McKee, who already has transformed the Saks headquarters’ 19th floor from a clubby atmosphere to a spare, modern space, will be introducing a new look to the windows, stores and packaging starting later this year, she said. The theme will continue to be black and white, she said.

McKee was previously chief merchant of Harrods, the British department store, before joining Saks. She came to Saks following the departures of Chief Executive Officer Stephen Sadove and President Ron Frasch.

Toronto-based Hudson’s Bay is Canada’s largest department store chain, with 90 stores selling goods ranging from shoes to perfume and appliances to linen. Last year it generated about C$4 billion ($3.7 billion) in sales.